Africa Fertiliser Outlook
BMI View: Africa will remain one of the lowest users of fertilisers in the world, which coincides with its traditional dependency on grain imports. However, we still see potential for growth, particularly in the context of base effects, as high grain prices are likely to improve incomes and allow for greater fertiliser use. Production growth is likely to be concentrated in North Africa over the long term. Greater use of fertiliser will be important given the poor growth in grain yields over recent decades.
Accounting for only around 2.5% of world fertiliser consumption, Africa is and will remain a small player in the global fertiliser market over our forecast period. The fertiliser market is particularly absent in Sub-Saharan Africa (SSA), and the region is characterised by a combination of high fertiliser deficits and very low use owing to failures on the demand and supply sides. On the demand side, poor price incentives; highly seasonal and variable production due to increasing rainfall variability; lack of liquidity, credit or insurance; and lack of knowledge (best agricultural practices) about fertilisers undermine farmers' capacity to adopt fertilisers or reap the benefits of their use. Moreover, with low and dispersed demand, the production and distribution industries remain largely underdeveloped. On the supply side, producers cannot make the economies of scale that would reduce the high costs of transporting, stocking and distributing fertilisers. As a result, fertiliser sold in SSA is some of the most expensive in the world.
North African countries (specifically Egypt and Morocco) along with South Africa are the leading consumers of fertiliser in Africa. However, their consumption levels remain relatively low. North African countries use on average 78kg of nutrients per hectare (ha), just more than half of US consumption. This falls to 41kg/ha in South Africa, less than 30% of US use.
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